Processing

ACCC won’t oppose JBS’s acquisition of Primo

Beef Central, February 6, 2015

THE Australian Competition and Consumer Commission has advised that it will not oppose JBS’s proposed acquisition of Primo, finding no grounds for concern over market consolidation.

Beef Central wrote about JBS’s intention to acquire Australian Consolidated Food Holdings, the parent company of Primo, one of Australia’s largest value-adding and smallgoods companies, which also operates a substantial export abattoir near Scone in NSW, in this earlier article. It was in the beef cattle processing segment, rather than smallgoods or value adding, where ACCC’s main scrutiny was focused.

JBS logoIn a statement issued this morning, the ACCC said it received submissions from a range of interested parties, including beef producers, competing abattoirs, and meat and smallgoods suppliers and customers.

Many industry participants expressed concern that the proposed acquisition would result in less competition in the market for the acquisition of slaughter cattle in northern NSW and Queensland.

“The ACCC undertook a detailed assessment and determined that Primo is currently not a strong competitive constraint on JBS. JBS’s abattoirs in Queensland and Primo’s abattoir at Scone are more than 500km apart,” ACCC chairman Rod Sims said.

Primo“Furthermore, the increase in market share as a result of the proposed acquisition would be relatively small and JBS would continue to be constrained in the market for the acquisition of prime cattle by a number of alternative abattoirs and supermarket chains, in the northern NSW and southern Queensland region,” he said.

While the ACCC determined that, in this instance, the proposed acquisition would be unlikely to raise significant competition concerns, it said it was “wary of the potential impact of further consolidation of abattoirs.”

“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” Mr Sims said.

The ACCC also considered whether the proposed acquisition would have any competitive impact on meat customers, smallgoods customers or the provision of prime cattle service kills, but did not consider that any significant competition concerns arose.

The transaction still requires Foreign Investment Review Board approval.

 

  • JBS USA Holdings Inc is a meat processor listed on the Brazilian stock exchange with ten processing plants in Australia, including beef processing capacity in Dinmore and Toowoomba in southern Queensland, and Brooklyn in Victoria. JBS Australia processes beef, veal, lamb and mutton.
  • Primo is majority owned by Affinity Equity Partners (a private equity firm based in Singapore) and produces processed beef, pork and smallgoods. Primo’s key smallgoods brands are Primo and Hans. It has a beef processing plant at Scone, NSW, and a pork processing plant at Port Wakefield, South Australia. It has manufacturing facilities at Chullora, NSW, and Wacol in Queensland.

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Comments

  1. Philip Downie, February 8, 2015

    500Km s nothing we have northern buyers down here in SW Victoria so that shows a lack of insight into how this industry works. 500km maybe a lot for city folk but not transport of live animals for slaughter do some in-depth homework ACCC.

  2. Edgar Burnett, February 6, 2015

    JBS has too much market power in Australia now and this sale should not be allowed. This is classic example of the drawbacks of foreign investment – If Primo had been owned by a Litter Aussie Battler and not Singapore-based Company, there would have been far less chance that it was available for sale to give a opportunity for JBS to buy it. Given the way that JBS treat northern cattle producers, this sale should not be allowed

  3. Kevin Rude, February 6, 2015

    Disappointing, the JBS juggernaut swallows another competitor, meanwhile the toothless ACCC thinks that abattoirs 500km apart can’t compete with each other. The Australian cattle farmers have copped anther blow & will ultimately pay the price.

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